Auto insurance plan promises savings, would gut catastrophic coverage

A bipartisan group in Michigan rolled out a new auto no-fault insurance overhaul plan today.

Republican Speaker of the House, Tom Leonard, R-DeWitt, and Detroit’s mayor, Mike Duggan, have been working together for months on the plan.

Lawmakers from both parties have tried for years to pass changes to Michigan’s auto insurance laws. Duggan said the legislation isn’t perfect for Democrats or Republicans. But he thinks he can get bipartisan support.

“We can’t get the perfect bill,” he said. “But if we can put a thousand dollars back in senior’s pockets, if we can cut rates 20%, that’s a major improvement.”

Michigan is currently the only state that requires lifetime medical benefits for drivers in catastrophic car accidents, and Detroit drivers pay the highest insurance in the country. Opponents of that benefit claim it’s the reason insurance prices are so high.

The legislation introduced Tuesday would let drivers choose between an unlimited lifetime health insurance plan or choose a cap of $250,000 or $500,000 for personal injury protection (PIP).

“This is the first plan that is going to offer real rate relief to the citizens of our state,” said Speaker Leonard during the rollout. “In fact, it’s not just going to offer it, it’s going to mandate it.”

Critics of the bill say letting drivers cap personal injury protection would result in a cost shift to the state’s Medicaid system – leaving taxpayers to pick up the bill.

If passed, the legislation would also:

- Subject auto insurers to a fee schedule for health services, similar to health insurers.

- Allow senior drivers with lifetime health care coverage to opt out of the auto health coverage insurance requirement if they are already covered through employee retirement plans, Medicare, or similar.

- Prevent lawyers from filing lies against health care providers until an insurer has denied a coverage claim.

- Mandate a roll back of rates for people who select the $250,000 coverage level for personal injury protection (PIP).

- Create anti-fraud measurers.

- Require any excess funding in the Michigan Catastrophic Claims Association that actuaries say isn’t necessary to cover medical care to be returned to drivers who paid into it.

The bill has an uphill battle. Senate Majority Leader Arlan Meekhof, R-West Olive, has said that any bill will be dead in the Senate if it requires insurance companies to roll back rates. This bill does just that.

Representative Lana Theis (R-Brighton) is a bill sponsor. She said everyone behind the bill is open to suggestions.

“It’s an all hands on deck,” she said. “If you’re coming with an idea that’s actually going to create savings for the folks, we’re gonna take a look at it.”

A spokesperson for Meekhof says the majority leader will look at the plan if it gets to the Senate.

The bill went to the House committee on Insurance, which Theis chairs. She said the committee will start hearing testimony and examining the bills next week.

For more information on HB 5013 visit the Michigan Legislature website.